FLEX LNG (NYSE:FLNG) is back in focus after its recent second quarter update, which combined firm full year revenue guidance, higher reported net income, and a fresh US$0.75 quarterly cash distribution.
At a share price of US$31.32, FLEX LNG has added a 26.96% year-to-date share price return and a 27.48% total shareholder return over the past year. This suggests the strong second quarter update and steady US$0.75 distributions are supporting positive but measured momentum after a softer 7-day move.
Spot opportunities beyond FLEX LNG by scanning a curated 12 dividend fortresses that echoes this mix of earnings support and consistent cash distributions.After a sharp run over the past year and a smaller pullback this week, FLEX LNG now trades well above the average analyst target yet screens at a sizable implied discount on intrinsic value estimates. Where does fair value really land?
Most Popular Narrative: 20.8% Overvalued
The most followed narrative puts FLEX LNG's fair value at $25.92, which sits well below the last close at $31.32. That gap is what investors are trying to understand.
The analysts have a consensus price target of $25.92 for FLEX LNG based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $30.0, and the most bearish reporting a price target of just $24.6.
Read the complete narrative. Read the complete narrative.
Analysts are incorporating modest revenue trends, rising margins, and a lower future earnings multiple to arrive at that $25.92 figure. Want to see exactly how small tweaks in those assumptions shift FLEX LNG's fair value compared with the current share price? The full narrative lays out the numbers behind that gap in detail.
Result: Fair Value of $25.92 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, FLEX LNG's dependence on a fully contracted 13 vessel fleet and high cash distributions could limit reinvestment and leave the company more exposed if charter rates soften.
Find out about the key risks to this FLEX LNG narrative.
Another View on FLEX LNG's Valuation
Analysts see FLEX LNG as 20.8% overvalued at $31.32 versus their $25.92 target. The SWS DCF model arrives at a very different conclusion, with an estimated future cash flow value of $80.95, which screens as a very large gap to the current share price. Which set of assumptions do you find more realistic for your own thesis?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out FLEX LNG for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 46 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
With FLEX LNG sending mixed signals on valuation and outlook, it helps to move fast and review the underlying data yourself. To balance the cautious and optimistic angles before you decide what it means for your portfolio, start with a clear view of the 2 key rewards and 2 important warning signs.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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